In an unprecedented move the Swiss National Bank (SNB) has announced a commitment to set a base on the Eur/Chf exchange rate at 1.20 in an effort to aggressively protect the economy from the effects of rapid franc appreciation in recent years. However, to me this is an expected move long time ago. With the deteriorating situation in Swiss economy ever since the Euro crisis started, money have been flowing into Chf, causing it to be the most expensive currency currently. With it's safe haven reputation, investors and traders rushed into Chf to protect their investment in Europe. With today's pegging, this mark the start of the downtrend for Chf.
Those who read our article on the 16 August on the possiblity of Chf pegging, you should have rip some good profit today after the crazy moves in the forex market. There will sure be some experts out there to argue that market forces will still flush into Chf given with the on going problem in Euro area. Please, step back and think, do you think SNB does this out of fun?